548. Deputy John Lahart asked the Tánaiste and Minister for Finance if he will explain the rationale for the current taxation treatment of carer’s allowance as taxable income, in contrast to other social welfare payments such as jobseeker’s allowance and disability allowance which are not subject to income tax; if he will consider introducing an exemption or revised tax treatment for full-time family carers in recognition of the essential care they provide; and if he will make a statement on the matter. [42409/26]

549. Deputy John Lahart asked the Tánaiste and Minister for Finance the extent to which carer’s allowance impacts tax credits, rate bands and overall PAYE liability in jointly assessed households; whether the Department has undertaken any assessment of the effective net benefit of carer’s allowance for working families; and if he will outline any proposals under consideration to reform the taxation of the payment, particularly for full-time carers who have left employment; and if he will make a statement on the matter. [42410/26]

I propose to take Questions Nos. 548 and 549 together.

Carers play a fundamental supporting role in society, and the Government are committed to supporting individuals and families with caring responsibilities. This is acknowledged by the broad range of commitments in the Programme for Government to improving supports for carers.

It is important to state that there has been no change in the Income Tax treatment of Carer’s Allowance and Carer’s Benefit. Carer’s Allowance and Carer’s Benefit are subject to Income Tax but are exempt from Universal Social Charge and Pay Related Social Insurance.

As the Deputy may be aware, there is a long-standing data sharing arrangement between both Revenue and the Department of Social Protection (DSP) which facilitates the operation of both the tax and welfare systems. DSP had been reporting information on a significant number of taxable DSP payments to Revenue, including Jobseekers Benefit, Maternity Benefit, One-Parent Family Payment, State Pension (Contributory or Non-Contributory) and Bereaved Partners Contributory Pension but information for Carer’s Allowance and Carer’s Benefit has not previously been shared.

As data relating to Carer’s Allowance and Carer’s Benefit had not been shared between DSP and Revenue previously, it was the recipient’s responsibility to declare this income to Revenue. When a carer was granted the Allowance or Benefit, the DSP notice advised the carer that the Allowance or Benefit was taxable income. It was agreed by DSP and Revenue that from 1 January 2026, information on Carer's Allowance/Benefit payments will be included in the Taxable Payments Report shared directly with Revenue.

Where a person in receipt of payments from DSP also has an additional source of employment or occupational pension income, the mechanism used to collect tax due is by reducing the person’s annual tax credits and rate band, by the annual amount of their DSP income. This ensures that the DSP payment is paid gross to the recipient, while the salary or pension, as paid by their employer, will have any tax due on both the DSP income and the employment deducted from it. This aligns the taxation of Carer’s income with other taxable DSP payments and significantly reduces the risk of an end-of-year liability.

It should be noted that not all carers who are in receipt of Carer’s income will have a tax liability, particularly if their income level is below the taxation threshold, or they have sufficient tax credits to reduce their liability to nil. A person’s tax liability will depend on their individual personal circumstances, income levels and personal credits available to them and their family.

The standard tax band is the amount of a person’s income which is liable to tax at the standard rate (currently 20%). The standard rate band for married couples/civil partners who are jointly assessed and where one spouse/civil partner has taxable income is €53,000 for the tax year 2026. Where both spouses/civil partners have taxable income, an increase to the standard rate band is available, this is capped at the lower of €35,000 or the income of the lower earner.

Therefore, where you have a jointly assessed couple and one spouse/civil partner is in receipt of Carer’s Allowance, and the other is in receipt of a taxable income source, they are entitled to the increase in the standard rate band, being the lower of €35,000 or the income of the lower earner, noting that the increase is non-transferable between spouses/civil partners.

However, it should be noted that a taxpayer cannot claim both the increase to the standard rate band and the Home Carer Tax Credit (HCTC), which is a tax credit available to jointly assessed couples/civil partners where one spouse/civil partner cares for one, or more, dependent persons. However, Revenue recommends that jointly assessed couples/civil partners qualifying for the HCTC, where one spouse/civil partner is also in receipt of Carer’s Allowance, should contact them to ensure they are maximising their tax credit and rate band entitlements for that period and that the correct tax is being deducted during the year.  In the absence of any contact, Revenue advises that the final taxation position for these individuals, can only be quantified when they submit their annual income tax return. On receipt of a completed income tax return, Revenue will ensure the most beneficial tax treatment is applied to their record for the relevant period.

As the Deputy will appreciate decisions regarding taxation measures are made in the context of the annual Budget and Finance Bill processes, at the appropriate time, and having regard to available resources and the sound management of the public finances.